2020 (2) TMI 1422 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - it is claimed that since the alleged default in the instant case is not crystalized as on date and as such the instant petition is legally untenable HELD THAT - On perusal of the records prima facie it appears that the objections/allegations raised by the respondent are illusory and not supported by any valid document, whereas, the applicant bank has filed volumes of papers documenting sanction, disbursement, working capital consortium agreement, joint and several deed of continuing guarantee filed by the applicant, CDR approval, master restructuring agreement, inter se agreement, recall/demand notice, reply of corporate debtor to the demand notice etc. to substantiate its claim - On perusal of the records it is found that the first and foremost objection raised by the respondent is that the application is barred by limitation. On perusal of the records it is found that the applicant bank has placed on record letter dated 28-2-2013 (page No. 446) addressed to the respondent company approving sanction of bank's stand on final restructuring package under CDR mechanism . That, the said letter is stamped and signed by the respondent company as a token of acceptance of the terms and conditions laid down in the sanction letter/s. Further, the records reveal that from time to time the respondent has executed/entered into various documents acknowledging the debt. On perusal of the record it is also found that the respondent company has acknowledged the financial debt in the balance sheet as on 31-3-2017, statement of profit and loss for the year ended 31-3-2017, cash flow statement for the period ended 31-3-2017 and notes forming integral part of the balance sheet as on 31st March, 2017 (pages 733-738). This itself shows that the respondent company has acknowledged the debt in the year 2017. Since the application is filed on 21-8-2018, it is well within time. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the Corporate Debtor committed default in paying the financial debt to the Applicant. On perusal of record, it is held that there is existence of default and that the application under section 7(2) of the Code is also complete in all respect - In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt'. Section 13(2) Notice issued by the Financial Creditor clearly indicates that entire debt was recalled. There is a default on the part of the Corporate Debtor in payment of the 'financial debt' There is no dispute in the case that the petitioner is the financial creditor. The application is also furnished in the prescribed form - 1 of the Rules and the prescribed fee has also been paid - the petitioner/financial creditor having fulfilled all the requirements of section 7 of the Code, the instant petition deserves to be admitted - Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Whether the application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 is barred by limitation.
2. Whether the Power of Attorney holder is competent to file the application on behalf of the financial creditor.
3. Whether the petitioner has established the default on the part of the respondent.

Detailed Analysis:

Issue 1: Limitation of Application
The respondent argued that the application filed in August 2018 is time-barred. The Tribunal examined the records and found that the applicant bank had placed on record a letter dated 28-2-2013 approving the sanction of the bank's stand on the final restructuring package under the CDR mechanism, which was accepted by the respondent. Additionally, the respondent had acknowledged the financial debt in the balance sheet as of 31-3-2017. Since the application was filed on 21-8-2018, it was within the limitation period. Therefore, the objection regarding the limitation was dismissed.

Issue 2: Competency of Power of Attorney Holder
The respondent contended that the Power of Attorney holder was not competent to file the application. The Tribunal referred to the decision of the Hon'ble National Company Law Appellate Tribunal in Palogix Infrastructure (P.) Ltd. v. ICICI Bank Ltd., which stated that a general authorization by a financial creditor in favor of its officers to handle legal proceedings is sufficient. The use of the term "Power of Attorney" does not negate the authority of the officer, and such an officer can be treated as an authorized representative for filing applications under sections 7, 9, or 10 of the IBC. Hence, the objection was overruled.

Issue 3: Establishment of Default
The respondent claimed that the petitioner failed to establish the default. The Tribunal noted that the corporate debtor had availed various credit facilities from the petitioner bank and had acknowledged the debt from time to time. The debt recovery proceedings initiated by the financial creditor further substantiated the claim of default. The Tribunal found that the evidence presented by the financial creditor, including various agreements and notices, was sufficient to establish the default. The Tribunal also referenced the Hon'ble Supreme Court's judgment in Innoventive Industries Ltd. v. ICICI Bank Ltd., which stated that the Adjudicating Authority needs to verify the occurrence of default based on the records provided by the financial creditor.

Conclusion:
The Tribunal concluded that the corporate debtor had committed a default in paying the financial debt to the applicant. The application under section 7(2) of the Code was found to be complete in all respects. The Tribunal admitted the petition and declared a moratorium prohibiting the institution or continuation of suits or proceedings against the corporate debtor, transferring or disposing of assets, and recovery of property by owners or lessors. The supply of essential goods and services to the corporate debtor was directed to continue during the moratorium period. The Interim Resolution Professional, Mr. Vikas Prakash Gupta, was appointed, and the petition was disposed of with no order as to costs. Copies of the order were directed to be communicated to the applicant, respondent, and the Interim Resolution Professional.